China South Korea Photo:VCG

A roadshow themed "Expanding the Global Use of the Yuan and New Opportunities for China-South Korea Financial Cooperation," hosted by the Bank of China, was held in Seoul, South Korea on Monday, bringing together nearly 120 representatives from the political, business and financial circles of both countries, the Xinhua News Agency reported. Participants noted that China's sustained financial market opening is creating fresh opportunities for bilateral financial cooperation with South Korea.

The same day, South Korea launched its historic 24-hour onshore spot dollar-won ‌trading system, a move the country's Finance Minister Koo Yun-cheol said is going to be the "starting point for the won's global leap," adding that it would further enhance the appeal of South Korea's capital market and its currency.

The development that China and South Korea are each advancing their currencies' global role, driven by their own development imperatives, could serve as a microcosm of the diversification shift in the global monetary system. In this shift, solid economic and trade bonds have laid a foundation for such financial endeavors and collaboration between China and South Korea.

As economic and trade partners with deeply integrated industrial and supply chains, China and South Korea saw bilateral trade volume surpass $330 billion in 2025. This massive and robust real economy interaction has created ample market space and enormous potential for local currency settlement, currency swap operations and cross-border investment and financing cooperation.

In this context, pragmatic institutional cooperation provides important support for their monetary cooperation. In July 2014, China and South Korea agreed to establish a direct trading mechanism between the yuan and won and set up a yuan clearing service in Seoul. 

In November 2025, the People's Bank of China (PBC) renewed a bilateral currency swap agreement with the Bank of Korea, with the value of the swap at 400 billion yuan ($58.88 billion). The agreement is valid for five years. The renewal of the currency swap agreement will further deepen bilateral monetary and financial cooperation, facilitate trade between the two countries and support the stability of financial markets, according to the PBC. These mechanisms have laid a solid foundation for even closer collaboration in the future.

At present, the volatility of global cross-border capital flows has risen markedly, and the spillover effects of monetary policies from major economies continue to ripple across markets. Many export-oriented economies are exploring more independent financial development paths to better cope with uncertainties in the external environment. As a typical export-oriented currency, the won has faced sustained pressure in recent years due to a range of external factors, and many South Korean trading companies have long grappled with unpredictable costs arising from exchange rate fluctuations in cross-border transactions. Deeper financial cooperation with China could offer South Korean market participants diversified risk management tools, effectively reducing excessive reliance on a single currency.

Beyond bilateral gains, evolving China-South Korea monetary cooperation is injecting strong momentum into the construction of a robust regional financial safety net. East Asia has long been vulnerable to external liquidity shocks. As two leading economic powerhouses in the region, China and South Korea's coordinated monetary exploration could build more stable financial infrastructure to support regional industrial chain operations. 

Expanding local currency settlement in emerging fields, including green finance and the digital economy, encourages more regional economies to participate in inclusive and independent financial collaboration, substantially enhancing the region's ability to withstand external financial turbulence. The market-driven cooperation rooted in real economic demands does not target any third party or intend to replace the existing international monetary system. Instead, it complements the global financial ecosystem with stabilizing forces, ultimately bringing a more stable development environment for all economies in the region.

Looking ahead, the two countries' financial cooperation still boasts broad untapped potential in terms of trade, investment, and reserve management. Yet, challenges also exist. Deepened cooperation requires coordinated policy arrangements, including aligned regulatory standards, improved information sharing mechanisms, and refined risk response plans, which call for consistent and pragmatic advancement from both sides.